EasyJet boosts traffic by attracting record numbers of penny-pinching business travellers

EasyJet has notched up record bookings by business travellers as cost-conscious firms increasingly favour budget airlines.

The Luton-based carrier achieved the milestone of flying 10million business passengers over the past year, and they made up 17 per cent of the 59million passengers carried in total.

The company said the boost to business bookings and a strong start to the ski season would help it reduce its deficit in the first half of its current financial year - when travel operators traditionally make a loss, before making up ground during the peak summer season.

Rivals struggling: easyJet is continuing to benefit as embattled competitors scale back their services

EasyJet posted a 9.2 per cent rise in revenues to £833million over the three months to the end of December after flying 13.7million passengers, up 6.2 per cent on a year earlier.

And it is forecasting half-year pre-tax loss of £50-75million, down from £112million a year ago.

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The 'exceptionally mild' weather seen in the latest quarter also helped limit disruption, with easyJet cancelling 64 flights during the three months against 236 a year earlier.

But easyJet said the heavy snow and adverse weather over the past week had since caused a surge in cancellations, at around 200 between Friday and Sunday alone, with French airports the worst affected.

It said the snow disruption over the weekend cost it around £1.5million, but stressed most of the cancellations were not at UK airports.

The no-frills airline has already sold around 80 per cent of seats on its planes for the first half, but said it was still too early to gauge its full-year performance with only 15 per cent of seats sold for the second half.

EasyJet founder: Sir Stelios Haji-Ioannou set up the budget airline in 1995 but resigned from its board in 2010 after clashing with management

It struck a cautious note over its full-year outlook, despite the robust start to its financial year.

The group said: 'EasyJet has had a stronger than expected first quarter, however the consumer environment is expected to remain tough and the impact of government austerity measures means that the industrial relations climate across Europe is expected to be increasingly difficult.'

Meanwhile, the airline is continuing to benefit as embattled competitors scale back their services, with capacity among rivals down by 2.1 per cent or 800,000 seats on easyJet routes over the final three months of 2012.

EasyJet's figures come in stark contrast to the woes faced by Exeter-based regional airline Flybe, which yesterday announced around 300 job losses as it battles to cut costs by £35million to stem losses.

Today's quarterly figures also revealed a further pick up in growth of revenues per seat, up 8 per cent to £55.96 with currency movements stripped out, helped by the success of its 'Europe by easyJet' adverts.

The firm's load factor - a measure of how well it is filling its planes - edged up to 88.6 per cent from 87.6 per cent a year earlier.

EasyJet continued to face higher costs, but said the rise was not as bad a feared due to more stable fuel prices and less flight disruption.

The group estimates its fuel bill for the year will be up to £25million higher than in 2012.

The airline hit the headlines earlier this week when founder Sir Stelios Haji-Ioannou threatened to sell his family stake unless the bosses followed his demands to boost profits and pay more to shareholders.

Sir Stelios set up the budget airline in 1995 but resigned from its board in 2010 after clashing with management.

He said at the weekend he had sold a ‘token’ 200,000 shares in the group as a warning shot to company directors over their plans to buy new aircraft, insisting that the board should focus on maximising profits instead.

Shares in easyJet rose 4 per cent or 41p higher to 886p in early trading.

Income shares watch: The board announced a one-off special dividend worth £150million in its annual results issued last November. It also delivered an ordinary dividend of 10.5p. The shares yield 2.8 per cent.

View from the City

'The share price has been cruising to new altitudes of late and today’s update provides further vindication,' said Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers.

'The strong increase in revenue, improved load factors and largely booked advanced seats have all contributed to what will likely be a much lower loss at the halfway stage.

'In addition, the company has begun to eat into the profit margin of other larger airlines, whilst consolidation and the demise of some carriers has presented opportunities on which easyJet has been quick to capitalise.

'The sector wide headwinds of stiff competition, unpredictability and geopolitical concerns are not specific to easyJet but nonetheless make for difficult progress.

'The shares have had a stellar run, having risen 105 per cent in the last year, as compared to a 20 per cent hike for the wider FTSE 100.'

Stock watch: EasyJet shares have put in a stellar performance over the past year

James Hollins of asset manager Investec said: 'EasyJet’s first quarter revenue and margin performance were marginally better than we had expected and there is upside pressure on our full year 2013 estimates.

'However, we think it would be wrong to adjust full year numbers yet as second half comparatives are tough and recent poor weather highlights the usual issues facing airlines that were virtually non-existent in full year 2012

'The key takeaway from the statement is a clear commitment, in our view, to a major new aircraft order that could raise the wrath of easyJet’s major shareholder [Sir Stelios Haji-Ioannou].'

Hollins added: 'while we support fleet upgrades, our concern lies in uncertainty over pricing and the reaction of the major shareholder. A recent stock sale around this issue led to a share price dip and risk remains of further action.'